Vice President of the European Commission responsible for Competition Policy

Presenting the Competition Policy Work Programme for 2013/14

ECON, European Parliament / Brussels

8 October 2012

Madam Chair,

Honourable Members,

Ladies and Gentlemen:

Today I will present to you the competition-policy work programme of the Commission for 2013 and 2014.

Some of you may have noticed that in my recent speeches I’ve been insisting on the need to establish a stronger link between the different competition policy instruments and our main priorities in this difficult juncture: setting the best conditions to stimulate growth and deepening and extending the Single Market as one of our best tools to do it.

The initiatives I am presenting to you today are inspired by these considerations. I intend to improve an already excellent system so that competition policy can respond to Europe’s current challenges at its best.

I will start with our current State aid modernisation initiative. In the second part of my presentation, I will review our main recent and upcoming actions.

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The Communication on State aid modernisation, adopted on May 8, sets out a broad reform package with three overall goals:

Ensuring that robust State aid rules fully support sustainable, smart and inclusive growth, following the main Europe 2020 strategic objectives;

Prioritising enforcement on cases that have a significant impact on the internal market; and

Streamlining our decision-making process.

I think it is particularly opportune to launch the initiative in this difficult economic and social situation, because such an important EU policy instrument as State Aid control must help Member States achieve the double goal of re-launching the sluggish economy and making public budgets sustainable in a context of fiscal consolidation.

At a time when the spending capacity of Member States is increasingly uneven, it is more important than ever to ensure a level playing field in the Single Market.

How will our reform package pursue these objectives? I can be very brief, because I discussed them at the ECON Committee workshop of 25 September.

Let me just recall that we want to encourage efficient and well-designed government support of the kind that I call ‘good aid’, whereas we should intensify our control of subsidies that do not provide real incentives for companies; crowd out private investment; and keep inefficient and non-viable companies on the market.

The regime that will emerge from the State aid reform will also minimisethe administrative burden for aid with limited impact on competition and trade and provide more clarity to aid-granting authorities.

Finally, a few procedural changes will allow us to take faster decisions and focus on cases with the highest impact on competition.

Where do we stand now?

We have been conducting a thorough review to translate the principles of the initiative into revised sector guidelines and to align them with our policy strategies and the next Multiannual Financial Framework.

Public consultations have recently been concluded on the Broadband Guidelines, the General Block Exemption Regulation and some procedural issues.

More work is on-going on the review of Guidelines for Airport and Aviation aid, Regional Aid, Industrial Rescue and Restructuring, Risk Capital, Environmental and Research and Development and Innovation aid.

Our assessment follows a common methodology across the board. The overall goal is to give Europe a regime that approves government support when it targets a proven market failure and has a real incentive effect.

To cut red tape for the least distortive cases, we are considering an extension of the material scope of the Enabling Regulation and of the General Block Exemption Regulation.

We are considering to extend the aid covered under the Block Exemption to aid for innovation, for damages caused by natural disasters, certain broadband infrastructure, certain social aid to residents of remote regions to travel and aid to forestry.

To balance this extension, Member States will have to show a new level of commitment for responsibilities they already have – in particular for block exemptions and schemes. Of course, the Commission will not give up any of its exclusive duties in the enforcement of State aid law. But we want to get member states fully on board, and not dragging their feet to comply with our rules.

Finally, through changes in the Procedural Regulation I want to open the possibility for the Commission to conduct sector inquiries and to obtain information directly from market players.

Work is progressing well. We plan to present our proposals to change the Procedural and Enabling regulations in the coming months. Before the Christmas break, we are also planning to publish a draft of our revised guidelines for Regional aid.

The main elements of the State Aid Modernisation package, including the revised Guidelines, should hopefully be in place before the term of the mandate of this Parliament.

Honourable Members:

I will now move to a quick overview of our recent and current action in various sectors.

In the energy markets, we have recently opened formal proceedings against Gazprom – a case that has attracted a great deal of interest – whereas the decision on the abuse case involving the Czech utility CEZ is expected in the course of the year.

In the information and communication industries, our work with Google is proceeding; whereas we are currently reviewing the case regarding Microsoft’s failure to keep commitments it took back in 2009 and I want to take a decision soon on the next steps.

We are also looking into standard-essential patent issues – part of the on-going patent war among smartphone manufacturers – with our investigations involving among others Apple, Samsung, Microsoft and Motorola.

Finally, we are active in the market for e-Books, for which we are currently market testing commitments that we negotiated with Apple and four publishers so as to bring effective competition in this market..

Last month, we approved the deal between Universal and EMI after they proposed a significant package of remedies. The main issues in this merger had to do with the new digital market for music.

The challenge in all these cases is that they involve relatively new and fast-changing industries where quick and effective decisions are key to keep the markets open and competitive.

In the telecoms markets, instead, the challenge is to have the incumbents play by the rules in liberalised markets. We are dealing with some cases regarding Telefónica, Portugal Telecom, Slovak Telecom and Deutsche Telekom.

We are also looking into the proposed merger between Hutchison 3G Austria and Orange Austria, and we have formally raised objections because of the risk that higher concentration in Austria might entail.

Moving on to financial services, we have initiated a series of highly visible actions, starting with the cartel investigation involving a number of financial institutions which we suspect to have manipulated reference benchmarks – LIBOR, EURIBOR and the Tokyo index TIBOR.

In parallel, our investigation in the market for Credit Default Swaps – also involving a number of top banks – is proceeding with a focus on possible foreclosure of trading exchanges on the CDS market.

Indeed, our work continues to control State aid for banks in distress. In July we took decisions involving two German Landesbanken, NordLB and BayernLB, the Spanish bank UNNIM, and the Luxembourg side of the Dexia group. A lot of work remains for the orderly resolution of the rest of the Dexia case.

Our enforcement action in more traditional industries is not less important. These days, we are dealing with the Outukumpu/Inoxum merger in the stainless steel sector, and last week we received the formal notification of Glencore/Xstrata.

Following a report published by the national competition authorities, we have set up a task force dedicated to the food markets, which are often closer to the everyday lives of Europeans than other, more visible cases.

In the pharmaceutical industry, Lundbeck and Servier received our objections before the summer break. We are concerned that these companies misused their patents to keep markets closed to cheap generic medicines. I hope that the decisions we will adopt – hopefully in 2013 – will change current practices by some players in the industry that leave a lot to be desired.

In the air transport sector we have been active using the State aid instrument. And I can anticipate that the sector will keep us fairly busy in the months to come, discussing the new Guidelines and at the same time trying to solve many State aid cases we have in the pipeline.

The third attempt by RyanAir to acquire the control of Aer Lingus is being reviewed using the merger instrument. And we are trying to find solutions to the problems observed in two of the main alliances – SkyTeam and Star Alliance– with a similar approach we followed with Oneworld.

State aid has also played a part in the postal sector, which will be fully liberalised by the end of the year across the EU.

We have taken a raft of decisions involving Deutsche Post, Bpost, La Poste, Hellenic Post, the UK Post Office, and Royal Mail. In two of these cases – Deutsche Post & BPost – we ordered the recovery of incompatible aid.

Finally, I will close with an update on the initiative on antitrust damages actions I announced last year.

The initiative aims to clarify their relationship with public enforcement while ensuring that firms and citizens across Europe can effectively exercise their right to claim compensation for the harm caused by breaches of EU antitrust rules.

As you know, I am committed to proposing this initiative.

I know we have similar views on this issue. The European Parliament has stressed the need for such an initiative with the report presented by Mr Sánchez Presedo and the letter of June 12 from the conference of Committee chairs.

However, on one important aspect of this legislative initiative – collective redress through representative actions – and having considered the Lehne Report, the Commission is still considering the options, and in particular whether or not this should be dealt with in a horizontal initiative.